BLOODBATH; Global Markets Crash As U.S. Fed Cancels 2025 Rate Cuts - What’s Next?

all right guys so this is your economic amagon once again and before I start I just want to let everyone know that I've been diagnosed with something called TMJ it's a bit of a jaw Disorder so you know some of the words that I say some of the sentences it might slur it might not sound very right so I beg your forgiveness for this but let's start The Show Must Go On so the Federal Reserve has thrown cold water on the global economy and it isn't looking good for the stock market now and if you thought rates would get slamed down to near zero it's time to recalibrate your expectations the FED has officially cut interest rates by 25 business points but instead of seeing the markets rally we are seeing a collapse in almost everything stocks and treasuries are plunging the US dollar has reisen to the highest since 2022 why because power just signaled fewer rate cards in 2025 and this is something we have talked about inflation is still a problem and all the economic numbers at least to the FED they looking robust so here's the deal rates are now coming down from 5. 5% to around 4. 25% money is getting cheaper and like previous Cycles it's easy to assume the FED will keep cutting all the way down to zero but bear in mind these following statistics CPI inflation for November has rebounded up to 2.

7% prices are still going up much higher than the fed's 2% % Target however call inflation which strips away food and energy is at 3. 3% so everything else shelter and services they getting more expensive cor inflation is the Federal Reserve preferred metric so this Rising higher isn't good for the cost of living in other words rates have to stay higher for longer even if you AR in the US higher rates there affect everything the price of gold the value of reats and stock indexes they're all falling for reason a real interest rate staying higher well that causes all risk assets to suddenly become less attractive after the fomc meeting the Federal Reserve updated their projections of the FED funds going forward and it's not looking good here guys especially for investors like you and me who hold stocks in September's projection rates in 2025 was supposed to hit 3. 4% however after the latest data the FED projects rates in 2025 to reach only 3.

9% and that's a half a percent more which is extremely significant so don't expect massive cuts of 50 points in any single meeting from where we are now to 3. 9% there's only room left for one or maybe two 25 Point cuts the problem with higher rates in the US is the state of the national debt in 2025 Trump is coming back to office and as we all know he has a ton of amb ambitious plans he wants to cut taxes and bring Industries back to the US from semiconductors to cor production Trump one stuff made in America but realiz he'll be doing this under a backdrop of higher interest rates power cancelling Cuts in 2025 just confirms this this chart is the feds updated do plot and it tells us where rates would be in the next few years and the numbers are startling in 2026 rates could settle at 3. 5 % but in 2027 we could still be in a world well above 3% so three more years of higher for longer this is the environment investors need to understand this is the backdrop where Trump will be operating in there will be more deficit spending over the next four years and no matter how the treasury borrows they will be paying higher rates it's important to remember the US is a net importer with a horrible balance of accounts the current account deficit has reached a record high in Q3 this year we are now at 310 billion further in hold and the implications well is very serious the US needs to constantly borrow money to Fu this deficit no Surplus is coming in to settle the books and as this continues more Federal borrowing will be needed so this is the Baseline case the FED keeping interest rates higher it's just going to compound the problem they're sacrificing tomorrow's economy to inflation today and this the big trade-off we must all realize according to the Peterson Foundation us deficits will continue to sore despite low unemployment from today until 2034 the projected deficit will average 6.

3% of US GDP and this isn't counting in Trump's future spending plans and make no mistake here guys the spending is going to explode at hitting seven or even 8% of GDP for the deficits is entirely possible Trump's Global tariff war is going to push us deficit spending to the Moon Joe Biden has run up record trade deficits also known as losses higher than any president in history by far these gaping wounds are costing our country countless jobs and trillions and trillions of dollars in wealth one of my top economic priorities will be to stem this bleeding and put American workers on a Level Playing Field it's about time and I must say I did it three years ago and they were doing great but that's been blown out the window by the Biden Administration now what Trump said makes sense if you bring back us manufacturing and produce things locally yes the trade deficit will come down however he left the second part out to reindustrialize Trump will have to borrow a ton of money to make it happen and this can be in a form of direct payouts lower taxes or huge subsidies to companies and there be R cards slowing to a crawl this will make borrowing cost stay stubbornly high the US Treasury is trapped in a dilemma and whether they borrow on the short end of the curve or longer dated bonds is going to be a nightmare in November the three-month TB average around 4. 6% the 10year note is at 4.